December 15, 2021 4:00pm by David Farrar

The emergency housing debacle

Newshub reports:

The Auditor-General’s inquiry into the Ministry of Social Development’s (MSD) funding of private rentals for emergency housing has found it didn’t monitor the quality of accommodation and couldn’t show it was receiving value for money.

So the Government both paid far far too much for it, and the quality was crap. This reminds me of the old parable. There are four broad scenarios for buying something.

  1. You are buying for yourself and paying for it yourself. In this case you are focused on both the price of it, and the quality of it.
  2. You are buying for someone else, and paying for it yourself. In this case you are focused on the price of it, but less focused on the quality.
  3. You are buying for yourself, and someone else is paying for it. In this case you are focused on the quality of it, but not the price of it.
  4. You are buying for someone else, and someone else is paying for it. This is always the worst scenario, as the person buying doesn’t really care about either the price or the quality.

“In this instance, we saw agreements to pay suppliers an agreed amount to provide accommodation, and little more than that. The Ministry had no way of knowing what standard of accommodation was being provided (and, in many instances, where that accommodation was) and whether it met the needs of those being housed.”

A classic case of scenario 4. They had no interest at all about quality or it it met the needs of tenants, they just handed over the money.

Stuff further reports:

The Auditor-General has slammed the Government’s use of rental houses for emergency housing, saying they likely drove up rents in some areas.

The damning report found the Ministry of Social Development (MSD) was paying several times the market rent for private rentals, which it was using for emergency housing stays.

It found these rents were so exorbitant that it was “likely the higher rates it paid for these properties distorted the rental market”.

This is astonishing. Not only did the Government screw over the emergency housing tenants and screw over the taxpayers, they screwed over all rental tenants by pushing rental prices higher overall. A rare trifecta of incompetence.